Happy New Year!
Winter is always a busy time at the co-op. During the first quarter of the year, we close the books on the previous year, have our financial records audited and plan our annual member meeting for March.
This year, we are working with a consultant to evaluate the rates we charge for electric service, which we haven’t changed since 2017. We should be ready to discuss the results of that evaluation at the March member meeting. Our goal is to keep rates affordable and stable for you.
One element we are reviewing is our monthly service availability charge. Historically, the electric industry blended all expenses into a customer’s energy use charge. Out of convenience, the fixed costs for operations, maintenance, repairs, customer service, billing and administrative overhead were paid through the rate charged for each kilowatt-hour purchased.
This practice creates problems. Using the kilowatt-hour charge to cover fixed costs means members with higher use pay more than their share, and members with lower use pay less. We believe every member should contribute their share of the cost of ensuring the light comes on when they flip a switch.
While we applaud members who reduce their energy needs through efficiency measures or rooftop solar system installations, we want to ensure our rates are fairly designed so members who buy more energy from us aren’t subsidizing members who buy less.
We now have a fixed monthly service availability charge and an energy charge based on kilowatt-hour use on customer bills. Large commercial operations also pay a demand charge based on their peak use during the month.
In a recent survey, our $15 residential single-phase service availability charge was the lowest of 30 regional co-ops. It is not large enough to cover our fixed costs, which means the kilowatt-hour charge is a bit higher than it should be. It also means changes in weather or energy use have significant impacts on member bills and on the co-op’s financial position.
Our rates are some of the most affordable in the region, saving you money every month. The rate study will factor in inflationary changes and an upcoming wholesale power cost increase to help us determine whether a rate increase is needed. We will then look at what the correct breakdowns of the various fees might be.
Rest assured, if rate changes are called for, we will approach them carefully to avoid creating the shock of large swings.
We look forward to sharing more information once the study is complete.